Chilling warning over Albo's cost of living measures

• Inflation surged by 4 per cent in May 
• Experts fear August interest rate hike
• Albo's cost of living measures blamed  
• READ MORE: Bad news for borrowers as inflation surges

Anthony Albanese's economic balancing act looks set to take a tumble as top economists warn a spike in inflation could prompt another interest rate hike - the 14th within two years.

Inflation jumped to four per cent in the year to May, up from 3.6 per cent the month before, prompting NAB analysts to warn that any rate cut could be delayed until after May next year.

A cocktail of rising energy bills, higher petrol prices and skyrocketing rents have helped push the consumer price growth to a six-month high - well above the Reserve Bank's 2 to 3 per cent target.

Analysts from UBS and Deutsche Bank have now joined Judo Bank chief economist Warren Hogan to predict a 14th rate hike in August, according to The Australian.

The prediction could be a crushing blow to embattled mortgage holders who have weathered 13 rate hikes between May 2022 and November 2023.

Anthony Albanese's economic balancing act looks set to take a tumble as top economists warn a spike in inflation could prompt another rate hike

NAB analysts have warned that any interest rate cut could be delayed until after May next year in an attempt to keep inflation down. Pictured is a shopper at Coles

The prime minister is expected to talk up his government's cost of living measures and economic management record in parliament on Thursday morning.

But some economists warn that Mr Albanese's cost of living measures run the risk of keeping inflation high and therefore hurting battling Aussies in the pocket.

'Governments are throwing a lot of money at the symptoms of the cost-of-living crisis, but that worsens the cause of it. And the cause is too many dollars chasing too little stuff,'  independent economist Chris Richardson told the publication.

'Governments have abandoned the field in the inflation fight. We are fighting the inflation fight one-handed.'

In news that will stir anger in the hearts of struggling households, Mr Richardson warned that 'mortgage relief is a very, very long way away'.

EY chief economist Cherelle Murphy also said another rate hike was now a strong possibility when the RBA meets again in August.

'The monthly consumer price index has jolted financial markets, which are now once again seriously considering the possibility of another rate hike from the Reserve Bank at its next meeting,' she said.

The bad news was delivered only a week after RBA Governor Michele Bullock confirmed a rate rise was more likely than a rate cut, with the cash rate this month left on hold at a 12-year high of 4.35 per cent.

'Yes, the board did discuss the case for increasing interest rates at this meeting,' she told reporters.

'No, the case for a cut was not considered.'

Despite fears that Labor's cost of living policies, such as the $300 energy bill rebate and the stage three tax cuts, are helping to drive up inflation, Mr Albanese is set to spruik that 'inflation is down' in parliament on Thursday.

In a speech to a CEDA conference, he will boast that his policies have been introduced 'so that it takes pressure off people, without putting pressure on inflation'.

'Inflation is down. Annual real wages growth is back,' Mr Albanese will say.

'Unemployment remains at near 50-year lows. And the gender pay gap is at a record low. My colleagues and I are proud of this record.'

The monthly measure of inflation is now back at the highest level since November 2023, when the Reserve Bank last raised interest rates.

But Treasurer Jim Chalmers said the monthly consumer price index was volatile and therefore less reliable than the quarterly inflation measure.

'As we've said many times before the monthly CPI number is volatile and can jump around because not every item in the basket is updated each month,' he said on Wednesday.

'Today's annual number was dragged higher by fuel prices and the impact of base effects, which are the result of a large fall in month-to-month inflation in May 2023 impacting the annual May 2024 number.'

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